Correlation Between Steven Madden and Mesa Air

Can any of the company-specific risk be diversified away by investing in both Steven Madden and Mesa Air at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Steven Madden and Mesa Air into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Steven Madden and Mesa Air Group, you can compare the effects of market volatilities on Steven Madden and Mesa Air and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Steven Madden with a short position of Mesa Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steven Madden and Mesa Air.

Diversification Opportunities for Steven Madden and Mesa Air

0.89

Correlation Coefficient

Steven Madden  Mesa Air

Very poor diversification

The 3 months correlation between Steven and Mesa is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Steven Madden and Mesa Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesa Air Group and Steven Madden is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Steven Madden are associated (or correlated) with Mesa Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesa Air Group has no effect on the direction of Steven Madden i.e., Steven Madden and Mesa Air go up and down completely randomly.

Pair Corralation between Steven Madden and Mesa Air

Given the investment horizon of 90 days Steven Madden is expected to under-perform the Mesa Air. But the stock apears to be less risky and, when comparing its historical volatility, Steven Madden is 1.44 times less risky than Mesa Air. The stock trades about -0.25 of its potential returns per unit of risk. The Mesa Air Group is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Mesa Air Group on December 28, 2024 and sell it today you would lose (39.00) from holding Mesa Air Group or give up 31.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Steven Madden  vs.  Mesa Air Group

Steven Madden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steven Madden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Mesa Air Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesa Air Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Steven Madden and Mesa Air

The main advantage of trading using opposite Steven Madden and Mesa Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steven Madden position performs unexpectedly, Mesa Air can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mesa Air will offset losses from the drop in Mesa Air's long position.

The idea behind Steven Madden and Mesa Air Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..